Canadian farmers are in an uproar over a backlog in grain shipments and some are blaming the country's booming oil production.

Farmers' frustration over the rail companies', CN and Canadian Pacific Railway, inability to move their product fast enough resulted in government intervention this week; on Friday Ottawa said railways would have to move a minimum amount of crop each week or face penalties, the Globe and Mail reported.

The rail companies have blamed cold weather for the delays but some farmers have been complaining for months that while their product sits in full elevators, oil cars dominate the railways.

Rail companies dismiss allegations that they favour the more lucrative oil trade.

"The notion that CN’s crude-by-rail business is displacing grain on the company’s rail network has no merit,” Canadian National Railway spokesperson Mark Hallman told the Western Producer in February, explaining that "CN’s crude oil car loadings in 2013 accounted for less than two percent of the company’s total freight volumes."

Last month Financial Post wrote about the possibility that the long-delayed Keystone XL pipeline approval may be having a domino effect on Canadian farmers.

"Many are blaming a backlog in Western Canadian grain movements on the surge in oil transportation by rail, in turn the result of insufficient pipeline capacity, caused by environmental opposition to oil sands growth," Claudia Cattaneo wrote for the Financial Post.

There may be some relief in the pipeline: The National Energy Board approved a plan last week that would reverse the flow of a pipeline between western Ontario and Montreal. The new direction – west to east – would allow Enbridge, the project owner, to carry more of Alberta's crude.

But the future of Keystone is anyone's guess. The Obama administration is expected to make it's decision before summer.Source: Mining.com

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